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For most non-profit organizations (NPOs), especially those that are relatively new, it is tempting to pursue funds from a few deep-pocketed donors. After all, most folks who care enough about a cause to start or work for a charity would rather spend most of his or her time helping the constituents, not requesting money. Getting big bucks from a small pool of generous philanthropists would seem to be the way to go.

While such an approach may indeed yield benefits in the form of lower administrative costs and expenses related to fundraising, most non-profits conclude over time a wiser approach is to diversify funding sources. Here’s a quick rundown of why, with a fuller explanation following:

Having diversified sources of income is seen by grant makers as:

• A predictor of sustainability
• A sign of stability
• A mark of good governance
• Evidence of accountability within the organization

NPOs with diversified sources of income are generally:

• Able to sustain the loss of any one funder, or several funders
• Less vulnerable in economic downturns
• More likely to be financially healthy
• Older and more stable
• Larger, with a greater reach and effect

When foundations are considering a NPO’s request for funds, they want to be assured that their gift will have a lasting effect, that the NPO is sustainable over the long term. Good governance and accountability are a part of that calculation, as well, as organizations with these traits are unlikely to be blindsided by financial crisis. Having diverse funding sources is not only a good indicator of these traits, but usually a prerequisite for acquiring them.

The current downturn in the economy exposed the gaps in many NPO’s funding structures. Obviously, if General Motors and Chrysler were the main bankrolls for a charity, that charity would not stand much of a chance when the hammer fell. A stumbling economy is only one reason a major funder may withdraw support, and a NPO that relies too heavily on one, or a small number of donors, may find itself bereft when that support dries up.

In addition, and perhaps most importantly, NPOs with diverse support create more natural synergies that benefit their programs. A donor may have a program in mind that complements the NPO’s mission and is willing to fund it. A NPO’s board of directors may enlist new members from among the varied donor groups in order to enlarge its skills base. More donor organizations may mean a larger pool of volunteers to draw upon, or even a new target group for its services.

One source suggested that no single funder contribute more than 30 percent of the NPO’s income. A suggested ideal mix was for six to eight funders to account for no more than 60 percent of the group’s income, with the rest coming from individual donors, operational income, smaller grants, and fundraising campaigns and events.